The Globe and Mail reports in its Friday, July 11, edition that President Donald Trump linked 50-per-cent tariffs on Brazil to the trial of former leader Jair Bolsonaro, leaving Brazil with few options to respond. A Reuters dispatch to The Globe reports that President Luiz Inacio Lula da Silva cannot intervene in Mr. Bolsonaro's legal issues, as he faces charges related to the 2022 election. Despite potential pain from high tariffs, Brazil is in a relatively strong position compared with other developing nations due to its lower trade exposure to the U.S. Unlike most countries in the world, Brazil actually has a trade deficit with the U.S. The U.S. takes in about 12 per cent of Brazil's exports, less than half what China buys, and worth only near 1 per cent of GDP. The tariffs would also cause pain in the U.S. Investment firm ARX said it saw only "marginal and manageable macroeconomic impact on the Brazilian economy," though others such as Goldman Sachs said they expected the tariffs could shave 0.3 to 0.4 per cent off Brazil's GDP if maintained. The U.S. tariffs are more clearly politically motivated than other levies threatened by Mr. Trump. Reuters says Mr. Lula is bereft of clear negotiating options.
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